BoE research warns of self-fulfilling prophecy in 'speed-limit’ monetary policy

Bank of England building in London

Research published on June 14 by the Bank of England has warned that constraining monetary policy through the use of 'speed-limit' rules may not be as beneficial as some studies have suggested.

In contrast to other rules, such as setting policy through a Taylor rule, a speed-limit rule focuses on the rate of change of inflation or the output gap. The working paper, The pitfalls of speed-limit interest rate rules at the zero lower bound by Charles Brendon, Matthias Paustian and Tony Yates

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